By Dr. Waquar Anwar

The information tabulated hereunder is based on the statements of revenue and capital accounts provided in budget documents for BE 2022-23 regarding Consolidated Fund of India. All expenditure of the Government is incurred from the Consolidated Fund of India and no amount can be drawn from this fund without due authorisation from the Parliament. It encompasses all receipts and disbursements on both revenue and capital accounts, including loans raised by it, repayments of loans, interest due and accrued on the loans.

The object of the presentation of data and analyses thereon is to understand the ratio of interest payments to revenue receipts of the government. This is based on the idea that the primary source of income for a government comprises its revenue receipts. So, all payments of revenue nature, in a healthy financial situation, including interest, should be covered by earnings from revenue receipts. Further, the instalment of loans accrued and due during the year is also a part of debt servicing. Although such repayment of instalment of prior loans is in the nature of capital disbursement, an economy should earn so much that this is also repaid in normal courses. Taking fresh loan to repay old loan is unbecoming of any healthy economy.

               [Rs. lakh crore]

 ParticularsRE 2021-22BE 2022-23
1Tax Revenue of Central Government [Revenue Account–Receipts]177.13194.12
2Interest Payment and Servicing of Debt [Revenue Account–Disbursements]82.9795.60
3Public Debts [Capital Account – Receipts]777.15870.92
4Public Debts [Capital Account – Disbursements]606.26707.51
5Interest Payment as a ratio of Revenue receipts [2/1]46.73%49.21%
6Public Debt Disbursements as a ratio of Public Debts Receipts [4/3]78.0%81.2%
7Debt Disbursements and Interest payments as a ratio of Debt Receipts [(4+2)/3]88.7%92.2%

The analyses depict that quantum of interest burden is about half of revenue receipts. Further, public debts disbursed is around 80% of fresh debts arranged. In other words, major share of fresh debts goes for servicing of instalments of old debts. If we include interest burden of past to the disbursement of debts, this share rises to around 90%. It may be concluded that overwhelming share of new loans is taken to pay the liabilities arising out of instalments of debts of the past and interest thereon.

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